KDI heightens its concerns over economy

A government think tank has changed its tone on the country’s economic outlook, heightening its concerns after earlier describing the economy as slowing.

In its April economic trend report released Sunday, Korea Development Institute (KDI) expressed worries about a stagnant economy, citing slowing output and drops in investment and exports.

“Korea’s economic activities appear subdued gradually on weakening domestic and global demand,” said the KDI in the report. “Exports are receding led by key items while domestic demand is limping.”

“On the production side, mining and manufacturing production declined further and services production grew less,” added the think tank.

Since November last year, the institute had been cautiously downbeat about the country’s economy, characterizing the situation as slowing.

The outlook change comes as the government has recently posted worrying economic data all across the board. Output, investment and consumption in February all fell, according to Statistics Korea late last month.

KDI blamed declining manufacturing output for the 1.4-percent on-year decline in overall industrial output for February. Mining and manufacturing output in the month declined 2.7 percent on year because of weakness in the semiconductor and auto industries.

Facilities investment also declined as the February figure recorded an on-year decline of 26.9 percent. The institute voiced worries of slowing investment in the semiconductor sector, as its manufacturing equipment imports fell 70.3 percent. The state of the slowing semiconductor industry was also reflected in export figures in March, which overall decreased 8.2 percent from the previous year.

KDI explained that despite the 5.4-percent on-year growth in the shipbuilding industry, exports remained weak due to a 16.6-percent drop in semiconductors and a 10.7-percent decline in petrochemical products.

Korea Economic Research Institute (KERI) echoed similar concerns in a separate report on Sunday.

It forecast that gross domestic product growth for the second quarter would decline by 1.04 percentage points from the previous year to 2.52 percent.

KERI, under business lobby group Federation of Korean Industries, also said that 15 economic indicators based on the statistics agency’s February data either fell or remained the same.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]